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Regulatory approval Time is of the essence

In Indiau2019s dynamic corporate landscape, mergers, demergers, acquisitions, schemes of arrangement, de-listings, and bankruptcies are critical levers for growth, efficiency, and stakeholder value creation. While the process-board approval, shareholder and debt holder consents, and regulatory clearances-appears straightforward, the reality is often far more complex, with regulatory delays posing significant risks to transaction values and business certainty.

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Regulatory approval Time is of the essence

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  1. REGULATORY APPROVAL: TIME IS OF THE ESSENCE

  2. INTRODUCTION In India’s dynamic corporate landscape, mergers, demergers, acquisitions, schemes of arrangement, de-listings, and bankruptcies are critical levers for growth, efficiency, and stakeholder value creation. While the process-board approval, shareholder and debt holder consents, and regulatory clearances-appears straightforward, the reality is often far more complex, with regulatory delays posing significant risks to transaction values and business certainty.

  3. Timeliness is not just a procedural concern; it is central to the success of corporate transactions. Delays can erode shareholder value, create uncertainty for employees and business partners, and result in missed opportunities. Asset quality deterioration has been a concern in Insolvency and Bankruptcy Code (IBC) cases. In mergers and acquisitions, the business environment changes and stock prices move rapidly. Protracted regulatory approval processes can undermine the very benefits these transactions are designed to deliver.

  4. There are some key authorities in the regulatory landscape which should be considered before moving forward. First, Reserve Bank of India (RBI) approval is crucial for transactions with cross-border elements, foreign investment, or those involving banks and non-banking financial companies. Its oversight ensures compliance with foreign exchange and sectoral regulations, but can add weeks or months to timelines, especially as regulatory scrutiny has increased in recent years. Second, Competition Commission of India (CCI) reviews mergers, acquisitions, and combinations to prevent anti-competitive outcomes.

  5. Regulators have recognised these challenges. The CCI’s Green Channel and Sebi’s streamlined delisting regime are steps in the right direction. The Ministry of corporate affairs is also working to simplify rules and enable fast-track M&As for low-risk transactions. However, balancing robust oversight with timely execution remains crucial. Companies, regulators, and stakeholders must collaborate to ensure that value-creating transactions are executed efficiently, with robust safeguards but without unnecessary delay. Only then can India’s corporate sector realise its full potential, delivering value to shareholders, fostering innovation, and driving economic growth. Time is of the essence.

  6. READ MORE HTTPS://WWW.FINANCIALEXPRESS.COM/OPINION/REGULATORY-APPROVAL-TIME-IS-OF-THE-ESSENCE/3876534/

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